Coronavirus (COVID-19) has meant that the Government banks and other organisations are having to act quickly to offer help and support to companies and businesses affected. The government shut down of whole sectors of the economy is having a profound impact.
This page is updated on news from the Banks, the Government, Suppliers, Local Authorities and the Law. There is a lot of information contained but all for your convenience and benefit, so take time and care to read all. Please do not call us asking about the grants available as all we know is on this page. Thank you
Please note that the guide was written pre COVID-19 and there are some likely changes to insolvency rules regarding wrongful trading. Please see more information on the new rules here.
- The Chancellor announces that the furlough scheme will continue until October, with employees receiving 80% of their monthly wages up to £2,500. However, from August, employers must pay National Insurance and pension contributions, then 10% of pay from September before this percentage risies to 20% in October. Companies are able to bring workers back to work part-time from July, but companies are to pay 100% of wages.
- Non-essential shops open from 15 June in UK, schools start to go back (slowly and not all at once) and outdoor markets and car show rooms open from 1 June.
- From 26 May, there was an extension to the maximum loan size available through the CLBILS scheme from £50m to £200m. Note there will be restrictions on dividend and bonus payments by borrowers. More information can be found here.
- HMRC launched an online service for SMEs to be able to recover Statutory Sick Pay Payments they have made to their employees amid the pandemic; The Coronavirus Statutory Sick Pay Rebate Scheme. Employers can use the service to make their claims, allowing them to receive repayments at the relevant rate of SSP that they have paid to current or former employees for eligible periods of sickness starting on or after 13 March 2020. More information can be found here.
- Latest information on guidance to local authorities regarding discretionary grants, See the guidance here
- Bounce-back loans available https://www.british-business-bank.co.uk/ourpartners/coronavirus-business-interruption-loan-schemes/bounce-back-loans/for-businesses-and-advisors The loan will be for 25% of turnover upto a maximum of £50k. Interest for the first 12 months will be paid by the Government.
- £800m worth of new investment announced to help innovative companies, namely start-ups, not eligible for the current coronavirus rescue schemes. Find out more.
- All viable companies with a turnover of more than £45m will be able to apply for government-backed support, including those which take in more than £500m.
- Job Retention Scheme has now covered over 8.4 million people
So what has been done?
The UK Government
- Businesses can apply for a Coronavirus business interruption loan. The next quarter of VAT payments will be deferred, meaning businesses will not need to make VAT payments until the end of June 2020. Businesses have until the end of the 2020-21 tax year to settle any liabilities that have accumulated during the deferral period. Revised measures have been made to this scheme to ensure small businesses get the loans they need. The need for personal guarantees for loans up to £250,000 has been removed.
- There is a package for the self-employed. They will pay 80% of profits, averaged out over 1-3 years, up to a maximum of £2500. Tax authorities will get in touch with them directly about the grants. Due to the complexity payments are likely to be in June as a lump sum. Those self employed will be able to claim universal credit. If your business has profits of over £50k you will not be able to claim. (Please be clear that dividends taken out of a company are not included as these are taken out at a low tax rate so these payments do not qualify you for additional help. If you have taken out dividends when there was no profit (distributable reserves) then you actually owe the government taxes. Please take this up with your accountant.)
- The insolvency rules are likely to be changed. Please see this page for details
- Under the Coronavirus Job Retention scheme, government grants will cover 80% of the salary of PAYE employees who would otherwise have been laid off during this crisis.
- CJRS Update for SMEs Jim Harra, Chief Executive of HMRC has announced that the online system for making claims under CJRS (Coronavirus Job Retention Scheme) has been developed and launched on 20 April. You can access the scheme here. https://www.access.service.gov.uk/login/signin/creds Employers can expect to receive their furlough grant within 4 to 6 days of submitting their claim with the first payments due to come through by the end of April. He also outlined the measures that have been taken to counter potential fraud and abuse of the scheme. In particular: - The employee must have been on payroll by 19th March; - The employer needs to have already been authenticated by HMRC; - There will be a 4 to 6 day processing period to make background checks; - There will also be checks after grants have been made to verify claims; - There will be a whistleblower’s hotline where fraud or abuse of the scheme can be reported (for example, if an employee has been asked to work when on furlough).
- Employees, who have not taken all of their statutory annual leave due to COVID-19,are able to carry over up to four weeks into the next two leave years. However, note only if the outbreak has made it impossible to take time off. Not being able to go on holiday abroad does not count.
- Employees are able to take emergency volunteer leave to help support essential health and social care workers.
- Income Tax payments due 31 July 2020 under the Self-Assessment system will be deferred to 31 January 2021, automatically without any applications needed. There will be no penalties or interest for late payment in this period.
- £330bn for all companies to access state-backed loans paying rent, salaries, purchase stock or suppliers - allowing companies to meet fixed cost needs
- For those in financial difficulty due to the virus, mortgage lenders offer a three-month mortgage holiday
- Tens of thousands of England’s retail, leisure and hospitality firms will be exempt from paying any business rates in the coming year (eligible for the ‘tax holiday’)
- Businesses with less than 250 employees can reclaim the cost of having to pay Statutory Sick Pay whilst eligible employees take the 14 isolation days off, due to the coronavirus. Those who are not eligible to sick pay (the self employed) are able to claim Employment and Support Allowance from the first day of illness rather than having to wait until day eight.
- Cash grants of up to £30,000 have been allowed for small businesses depending on rateable values (The grant for companies with a rateable value of less than £15,000 has been increased to £10k). You will need to claim this through the local authority. Here is some more information on rates. Be aware though that if you pay your rent with rates included then you will not receive any help. You have to be billed directly by the rating authority. Also, if you do not have a business premises ( ie you work from home) you are not eligible for a cash grant.
- The Government has published guidance to Local Authorities on who is eligible. See this guide
- HMRC’s Time to Pay service has been expanded. This includes a new helpline 0800 0159 559 so that businesses and those who are self-employed can arrange to defer tax payments. Breathing space is therefore given to SMEs around paying taxes
- A tax break on national insurance contributions. 500,000 people will no longer have to pay this tax. Those who still have to pay will save around £85 a year
You can read the latest advice and guidance from government for businesses on its coronavirus pages, and ultimatley by keeping up to date with the news (information for other areas such as Wales and Ireland can also be seen on key news outlets). HMRC have a new dedicated phone number for the coronavirus helpline targeted at businesses and the self-employed: 0800 024 1222.
The Bank Of England
- an emergency cut in interest rates from 0.75 per cent to 0.1 per cent, taking levels back down to the lowest level in history.
- announced its plans to free up billions of pounds of extra lending power to help banks support firms amid the coronavirus outbreak.
Commercial Banks and Financial Companies
- Allowing business customers to not have to pay back the capital on their loans for a period of 3 months, meaning they will only be paying the interest on their loans. The same has been indicated for mortgage customers.
- £5 billion in funds for small and medium sized UK businesses has also been announced by NatWest. This has been backed by the government.
- Extended overdraft facilities.
- Barclays and Natwest announced (26th March) that they will NOT be requiring a personal guarantee on Business loans of less than £250k.
- Commercial banks are NOT paying dividends to shareholders to preserve cash.
- Santander has launched a £40m fund, via its Fintech provider Ebury, to provide loans to SMEs
- The British Business Bank that is funded by the government is in the process of accrediting other finance providers to allow them to offer loans under CIBLS. See this page for updates
- MarketFinance has launched a scheme that will enable it to lend against applications made for the furloughing of staff. See more details here
- HSBC, Barclays, Santander and Natwest announce a number of supportive measures for its customers
- The main banks have released a press statement on how they are handling applications for CBILS. "Following the changes to the scheme announced today lenders will only ask businesses for information and data they might reasonably be able to provide at speed and we will not require the provision of forward-looking financial information or business plans from businesses applying for CBILS-backed lending, relying instead on our own information to assess credit and business viability." https://www.ukfinance.org.uk/press/press-releases/uk-finance-issues-joint-statement-behalf-seven-largest-sme-lenders
- Morrisons has announced that suppliers with between £100k and £1m turnover will be paid immediately on presentation of their invoice. Over £1m turnover the term will remain 60 days. Companies with less than £100k will need to wait 14 days.
- Facebook has announced that it is releasing $100m cash grants to companies that use its apps around the world.
- Many businesses have closed and halted trading due to the virus, including all restaurants, gyms, cafes, retailers - even McDonalds and ITV/BBC filming.
- Martin Lewis releases £1m to charities.
Devolved Regions of Scotland, Wales and Northern Ireland
- The Scottish Government has launched a website and helpline for small businesses struggling to cope. They have also announced a £320m support package for affected businesses.** The link to claim a Coronavirus Business Support Grant in Scotland is now LIVE.
** If you are registered for non-domestic rates (i.e. you have business premises, an office, warehouse or shop) you may be able to claim a cash grant of £10,000 or £25,000. This depends on what business sector you are in, and the rateable value of your premises.
IMPORTANT: You need to complete a claim form to apply for the grant, Edinburgh City Council link is : https://lnkd.in/dgR-Ggy For all other Scottish local authorities, go to the link below, find the 'Applying for a Grant and getting paid section' and enter your local authority from the drop down https://lnkd.in/dZFcvtv
Specific guidance for businesses in Northern Ireland
Businesses in Northern Ireland can access a variety of specific and UK-wide coronavirus support schemes and measures. The Northern Ireland Executive aannounced a £367m package of grants to provide funding to around 30,000 businesses in Northern Ireland. Information is available via Invest NI. Businesses with a rateable value of up to £15,000 can access a COVID Small Business Grant of £10,000. More information on what is being done to help NI businesses can be found here.
Coronavirus support for seafood fishing industry – (Scotland only)
The Scottish seafood sector is to receive a package of more than £5 million in financial support during the COVID-19 outbreak.
An initial payment of 50% of two months’ average earnings will be made to owners of all full time Scottish registered fishing vessels of 12 metres length and under. Support is also being developed for the onshore processing industry and others in the shellfish growing sector.
Marine Scotland will be writing to all vessels and relevant representative Associations with more
details. If you have any immediate queries you can email firstname.lastname@example.org.
Further clarification of the scheme is as follows:
- full time is defined as where a vessel has recorded landings of £20,000 or more. This is the same limit that has been applied in previous schemesvessels that are under 12 metres in length and were registered in Scotland on the 18 March 2020
- earnings are defined as recorded landing income from sales notes from 2019. This data is submitted to Marine Scotland by buyers
- monthly payments are based on monthly average 2019 sales income
- wrasse catching vessels will not be included in this initial scheme.
Liverpool's metro mayor has announced a £400,000 support package for the region's music, film and TV industries.
A fund will provide up to £10,000 in grants or loans to support small and medium-sized businesses in the music sector. Companies working in film or TV will be able to apply for investments of up to £25,000 per project to help them through the pandemic.
Liverpool's mayor Steve Rotheram said that the industries covered by the support package are "at the beating heart" of the region's identity and are responsible for 5,000 jobs, contributing £228 million to the local economy "in normal times".
"It is absolutely vital that we do everything we can to protect and preserve our music''
Regulations, Employment and Insolvency Law
Companies are legally entitled to cancel holidays due to staffing shortages. However, they must give notice equivalent to the length of holiday. If an employee cancels their holiday, the company does not have an obligation to allow them back into work if they have made alternative arrangements. Be aware that you can lay off staff without resorting to redundancies. For more information on this see the Government site.
Being an employer you may be worried about your rights and duties, what they are: The Federation of Small Businesses has a useful page with advice on this here.
The government is looking at passing legislation to ensure that companies do not become insolvent due to the outbreak. Winding up petitions may be stopped and the rules relaxed on wrongful trading are under discussion. For more information see this page https://news.sky.com/story/coronavirus-ministers-race-to-reform-insolvency-laws-11963361
If you need to make employees redundant during furlough then make sure you do it properly and don't rush it.
Filing of Accounts
Companies House has said that companies have an extra 3 months to file their accounts due to Coronavirus.
There is a moratorium on any action for forfieture of leases. Many retailers including Primark have said they are not going to pay their rent this quarter. In addition Landlords cannot serve winding up petitions on businesses that have not paid their rent as they have had to close.
Will our business get its money back spent on services that are not now deliverable?
This is a difficult question and you should probably contact a lawyer who can look at any contract. If you have spent money using a credit card then you can usually get a refund.
How can businesses mitigate their problems?
In all honesty, the best advice for businesses is to follow the same advice given to the general public...keep an eye on what is happening in your local area/country. Follow the measures suggested i.e. washing hands frequently, stockpiling essential goods, avoiding close contact with others, working from home if possible, cancel/postpone any unnecessary business travel.
A little tip too...be careful of your brand! - If you need to make people redundant then make sure you do it in respectful and sympathetic tone. Social media is shaming companies with pictures of letters and emails etc that do not look good...do not be a part of that!
How can we help?
We have numerous guides of options you can look into to help...download our CVA experts guide here or view our pre pack page. If you feel you must close down permanently then see our page here on liquidation. If you are in the hospitality industry we do have a rescue guide, not specific to the current situation but still relevant.
Meanwhile, if you have any serious concerns about cashflow then you can make use of some of our tools for free. Prepare a cashflow forecast using our template here, regularly updating it as this will help wish cash planning. Remember to be realistic. The more realistic you are the better you will see a true reflection of your future cash situation, any deficiencies to be able to address any issues in advance.
Company Rescue have been providing services to distressed company directors for over 20 years and we will continue to try and help businesses of all shapes and sizes through what could be, a very turbulent, few months.
If you have serious concerns about the ability of your company to pay it’s bills and survive beyond the current situation please do give us a call, FREE on 0800 9700539.
Amid this crisis, we are all working from home so can answer your enquiries as normal. We also have a 24 hour online chat service on this website, manned by real people, not robots. If our chat team are unable to answer your questions straight away, then within a few hours one of our experienced team members will call you, listen to your concerns and offer some advice and suggest steps you can take.
Categories: What is administration
How can we help?
We have numerous guides of options you can look into to help...download our CVA experts guide here or view our pre pack page. If you feel you must close down permanently then see our guide here on liquidation. If you are in the hospitality industry we do have a rescue guide, not specific to the current situation but still relevant.
We also have a full 80 page worried directors guide which you can now download for free.
Please note that the guide was written pre Covid-19 and there are some likely changes to insolvency rules regarding wrongful trading. Please see this page here.
Meanwhile, if you have any serious concerns about cashflow then you can make use of some of our tools for free. Prepare a cashflow forecast using our template here, regularly updating it as this will help wish cash planning.
Worried about poor cashflow? How to win new work? How to pay wages on pay day? For expert advice on a range of issues download our free Ultimate Guide For Worried Directors today. Or just call us on 0800 9700539
Please note that the guide was written pre Covid-19 and there are some likely changes to insolvency rules regarding wrongful trading. Please see this page here.